• European Central Bank’s Lane is speaking Wednesday, 12 July 2023
• Reserve Bank of New Zealand July meeting minutes – Inflation remains too high
• Reserve Bank of New Zealand leave cash rate unchanged at 5.5%, as widely expected
• US inflation data due, Wednesday, 12 July 2023 – preview – headline “sharp drop” expected
• PBOC sets USD/ CNY mid-point today at 7.1765 (vs. estimate was 7.1788 – 7.1954)
• North Korea appears to have launched another ballistic missile
• Australian Treasurer Chalmers says no decision yet made on next RBA Governor
• USD/JPY under 140, and the US dollar is losing ground more widely also
• Japan PPI (June)-0.2% m/m (expected +0.2%)
• Japan Core Machinery Orders (May) -7.6% m/m (expected +1%)
• Eagerly awaited US inflation data is due today, Wednesday, 12 July 2023 – preview
• China Securities Journal says anticipating increased fiscal stimulus to support economy
• Reserve Bank of Australia Governor Lowe is speaking Wednesday Sydney time – preview
• Oil supported by both (lower) supply and (higher) demand factors
• ICYMI – China June new bank loans jump more than expected in the latest data
• Deutsche Bank forecast a +50bp Bank of England rate hike at the next meeting
• Forexlive Americas FX news wrap 11 Jul: One more sleep until key CPI. USD moves lower.
• UBS looking for a modest recession, rolling across segments, unlikely before year end
• Private oil survey data shows larger headline crude build than was expected
• Bank of Canada expected to raise interest rates again today – Goldman Sachs preview
• Trade ideas thread – Wednesday, 12 July 2023

The
US dollar continued to decline in Asia morning trade, with major FX
higher against the dollar across the board. USD/JPY was notable,
dropping to its lowest since the middle of June to back under 140.00.
EUR, AUD, CAD, CHF, GBP and NZD all rose.

Data
from Japan showed wholesale inflation slowed for the 6th straight
month. Producer prices (-0.2%) and import prices (-1.2%) declined in
June. The drops were mostly due to lower commodity prices. These will
likely feed through to an easing of consumer prices in the months
ahead. The Bank of Japan has been telling us, over and over, it
expects cost-push pressures to ease in this way.

The
Reserve Bank of New Zealand Monetary Policy Review and official cash
rate (OCR) announcement followed. The Bank left its OCR at 5.5%, as
was basically unanimously expected. While the rate hike cycle in NZ
is over the Bank said it’d be holding the cash rate “at a
restrictive level for the foreseeable future, to ensure that consumer
price inflation returns to the 1 to 3% annual target range, while
supporting maximum sustainable employment”. NZD/USD had a wobble a
touch lower on the announcement but as I post is making new highs for
the session.

The
People’s Bank of China once again set the onshore
yuan stronger than expected at the daily reference rate fixing. An
earlier report in China’s Securities Journal said its anticipating
increased fiscal stimulus to help support the economy.

Asian
equity markets:

• Japan’s Nikkei 225 -0.7%

• China’s Shanghai Composite -0.1%

• Hong Kong’s Hang Seng +1.2%

• South Korea’s KOSPI 0.0%

• Australia’s S&P/ASX 200 +0.4%

NZD higher after the RBNZ:

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